After 13 years in the business, we are changing our focus.
We are discontinuing taking on new clients for our digital marketing services business – online advertising, lead generation, performance marketing, websites, SEO etc.
We will here onwards be focused on providing consulting (advisory) in digital marketing and marketing and not on digital marketing execution. For more information regarding what consulting we do, please refer to the following pages on our website interskale.in: Digital marketing consulting Marketing consulting
I will be personally involved in the above.
In addition, I am interested in talking to digital agency founders, senior digital marketers, and clients currently utilizing digital marketing. If you would like to compare notes or share your experiences, I would appreciate your insights. I am also in the process of working on a book in this field. More on this soon.
The four marketing tasks Digital marketers receive briefs from their in-house business teams, or if they are working for a digital marketing company, from their clients. This is often a specific requirement e.g. website development, social media marketing, running online campaigns, setting up e-commerce or other such services. In some cases, the requirement may be for a digital marketing strategy or a composite set of activities.
Either which way, the digital marketer is not involved in the marketing side of things. To better understand this, let’s begin by defining marketing, to be precise by defining marketing management, which is marketing that organizations practice. This is the art and science of identifying target markets and creating, communicating and delivering superior customer value*. Let’s call the underlined items the four marketing tasks.
Of these four tasks, digital marketers are responsible for communicating value, are partly responsible for choosing target markets and occasionally responsible for delivering value. They are rarely involved in value creation. Let’s explain this a little more.
Choosing target markets in terms of geography is the prerogative of marketers. However, digital marketing, especially online advertising, allows the targeting of audiences in terms of demographics, interests and behaviour. This is thanks to the sophistication of the ad platforms, whether Google, Meta or the others. Thus, a digital marketer can recommend innovative ways of targeting that are not possible in print, TV or other offline advertising. Hence the statement in the paragraph above: that digital marketers are partly responsible for targeting; it is a responsibility they share with their clients (marketers).
Again, in e-commerce, digital marketers can shape the user experience by building great websites. This is an example where digital marketers play a hand in delivering value. Digital marketers also play a role in setting up systems for consumer feedback as well as in studying the Web analytics across paid, organic and social media. This data can form the basis of recommendations to the client on how to improve the product offering i.e. help create value.
There will be other examples of how digital marketers play a marketing role. However, the responsibility for marketing is widely understood to be that of the marketer. It is her organization that develops the product or service, that develops pricing and creates and runs the distribution system. It is also the marketer who acts as the guardian of the brand, managing it so that it remains strong and grows stronger.
Further, digital marketers assume that the marketing clients knows what is the key marketing problem that needs to be addressed and have briefed them accordingly i.e. marketing objectives for digital marketing activity are well defined.
Without doing a good job of the product, price, distribution, brand management or in defining the marketing problem correctly, it is foolhardy to expect that digital marketing by itself will provide great results.
Unfortunately, many of these assumptions about what marketers must necessarily do – before commissioning digital marketing – don’t hold in practice.
Let me illustrate this with an example that we faced with a client of ours.
Case study: A retail entertainment centre A retail entertainment client – will keep details confidential but think theme parks – with several attractions to be enjoyed in one outing, was faced with lackluster sales. They were pioneers in the business, had been around for some years and had encountered little direct competition. They had suffered due to the Covid pandemic. On resuming operations, they had to hire new staff. The company had not invested much in marketing or digital marketing in recent years. The customer purchased or topped up a prepaid card at each visit and this was debited whenever an attraction was visited by the customer.
They approached us, believing that digital advertising can help improve the sales.
The client, a INR 200 crore (USD 25 million) company, lacked a marketing team and had not invested in market research, formal or even informal. They did not know why their performance had stagnated. Was it poor recall or awareness of the brand? Was it due to poor communication of the location (they were in a little known area in the city)? Was it due to poor word of mouth due to an unsatisfactory experience of previous customers? Was it due to increased competition – a few had opened up in recent years – even though our client overall had a superior set of attractions? Was it due to poor conversion of the walk-ins into customers (customers could walk through and buy the prepaid card only when they wanted to play) ? Was it the due to the customers showing interest in only a few attractions and not others? Or was it something else?
Our own visit to their centre revealed that any or more of the above hypotheses could have been the cause of the sales issue. While our own mandate as a digital marketing company was to deploy campaigns that could address the sales issue, the advertising message would necessarily be different depending on the real cause. E.g. if customers were defecting to competition, we could choose to focus on the width and superiority of our attractions, if it was a simple matter of people not knowing where to go, we could create a custom map as part of our advertising. If it was poor word of mouth, we would spread positive buzz through social media.
If on the other hand, walk-ins were not converting to customers, it could be due to the fact that for the most popular attractions, there was a waiting period. It could be due to poor service by the company staff present at each attraction or due to high ticket prices or something else. These root causes would need the company itself to correct the core product and service.
In view of the above knowledge gap, in addition to digital marketing services, we offered to act as marketing advisors to the client. We asked to study the data on daily footfalls and sales. We commissioned customer surveys among the walk-ins and customers at the centre as well as telephonic surveys among past customers. We quizzed the staff as well.
What happened thereafter is another story. Suffice to say that we found two key issues. We were then able to put digital marketing to work to address these issues. For a third issue, we found that using collateral in the form of danglers and stickers at each attraction would help. Hence, we designed these. This was a very different solution from the digital advertising we had been originally hired for.
This case is more to make the point that doing smart marketing is a pre-requisite to being successful at digital marketing. In fact, good digital marketers must be good marketers first, ask the right marketing questions and find ways to get answers to these.
* Marketing Management, Chapter 1, 16th edition: Philip Kotler et al
This item first appeared as a guest blog in Brand Equity, Economic Times on April 6th,2023. =======================================================
The digital marketing landscape keeps changing. Here are 5 changes that the Interskale team and I have experienced in recent times. Each of these impacts the day-to-day work we do.
1. Volatility among the ad platforms in use The mix of ad platforms that are available and on the ascendant or decline keep changing.
Let’s take Google Ads, the largest player. Over the last couple of years, Google Ads has unleashed disruption via machine learning (ML). Firstly, it has introduced bidding strategies that use ML viz. Smart Bidding and Performance Max. Secondly, ML is being used to create and serve the most appropriate ads for each context.
With the above changes, the old style of managing Google Ads – that was around for over a decade – has gone. Selection and optimization of keywords is no longer required. Google Ads automatically optimizes keywords, based on the bidding strategy and marketing objectives set by the digital marketer.
This change at Google Ads is the biggest one ever and it has changed the task of the performance marketer quite a bit.
Meta, which with Facebook Ads and Instagram Ads, has the second largest ad platform, is planning to make a major move in AI in the form of launching creator tools in the short term and AI personas (targeting) in the long term, reports Marketing Dive 1. Zuckerberg has said he wants to ‘turbocharge’ Meta’s products with AI. Tech companies like Meta and Google cater to millions of ad clients, mostly small businesses. A big constraint for these small companies in getting more out of online advertising is ad creation. Only 40% of Meta’s 10 million or so advertisers use Reels, says The Economist. If Meta can provide AI-based tools that can create ads (with images and videos) without the need for specialist designers, it can lead to increased spending by the small clients. Such tools can also make creating content easy, leading to more users and more engagement for Facebook and Instagram. To quote The Economist, the day may not be far when a small retailer can create a custom ad using a voice command.
Let’s look at two other platforms. Data for the U.S. online market is presented here.
At Twitter, there is volatility after the takeover by Musk. There are feature glitches and outages and a perceived lack of stability of the business. Separately, there have been concerns about brand safety due to the growing amount of misinformation and hate posts.
Advertisers have pulled back. Twitter Ads was never a vital part of their online media plans. In the U.S., Twitter’s reach per week among adults is only 22% as against 63% of Facebook and 40% of Instagram. For media companies, reach is an important metric determining share of ad spend. Twitter’s low reach leads to it contributing only 1.2% of total online spends in the U.S., far lower than other major sites like Google, Facebook and TikTok. Twitter is also seen as a product only suited to brand advertising and not performance marketing, unlike Google and Facebook. The need of the hour is for Twitter to grow its reach and revamp its ad products.
I feature a fourth ad platform here viz. TikTok. This is banned in India. In the U.S., it has had phenomenal user growth and it has high usage per day, especially among the 18-24 year olds. It’s an excellent option for marketers to build reach among this age group. Its popularity has led to the introduction of Instagram Reels and YouTube Shorts and the take-off of short video formats in general. Short form video has taken over social media. 40 minutes of the 64 minutes that Americans spend on social media is spent watching video clips. However, as a recent article in The Economist2 explains, monetization of short video formats like TikTok and Instagram Reels is poorer than other ad formats. Firstly, there are fewer ads within videos as compared to other social media (one reason that there are fewer video ads is that many advertisers, especially the small ones, have yet to create ads in this format). Then, the clickthrough rate is lower too.
TikTok is facing barriers to operating in the U.S. and in Europe, due to regulatory pressure. In case TikTok’s usage does get curtailed due to this, there will be a shakeup among the various short form video products.
Impact on digital marketers The above examples show the shifting sands that ad platforms are. No digital marketer can hope to wholly depend on one or two, nor is experience with one or two enough. Digital marketers have to be alert and constantly evaluate the mix of ad platforms to be used for their brands.
2. Running an e-commerce business is not everybody’s cup of tea E-commerce is now a somewhat mature industry. There was a time when consumers were scared of transacting online, then there came a time (shortly around the time Flipkart went public) when every guy next door wanted to set up an e-commerce company, now neither of this is true. Only people with deep pockets are launching e-commerce businesses.
While the entry barriers remain low and are probably lower than ever before (with Shopify, UPI, logistics partners, Amazon and other marketplaces available), success i.e. creating a profitable e-commerce business isn’t easy. There has typically been a long gestation time (e.g. Amazon took 9 years to become profitable).
The business requires ongoing investments. E-commerce companies compete in large markets. There is the desire, rather the imperative to be no. 1, leading to pressures to invest in the business in diverse areas viz. product development, technology, infrastructure, distribution, customer acquisition, offline expansion, new product lines, markets, people etc.
Then there is impending competition. Millennials and tier 2 and 3 twins have taken to online transactions in a big way and the number of e-commerce users is slated to grow from 150-180 million in 2022 to 450-480 million in 2027, as per a Bain report3. This is leading to a FOMO mentality and a flood of investments by consumer companies in this D2C business. E-commerce players need to keep up their investment to counter competition from deep-pocketed players.
Thus, e-commerce is not traditionally a high ROI business. E.g. beauty e-tailer Nykaa in the first 9 months of FY 22-23 has had a gross margin of 44%, an EBITDA of 5% and a PBT of less than 1%.
Impact on digital marketers As only serious players are now in the e-commerce business, digital marketers need to considerably up their game, their recommendations and execution, in organic, social and paid marketing, must be top class. For example, the e-commerce site must have top class UI/UX and a platform that can scale, it must have a wide and preferably a differentiated product assortment and top-class SEO.
3. Internet privacy issues and their impact on digital marketing Google Ads is experimenting with Topics API, which works within a user’s browser and collects high-level interests of the user, such as fashion, food or travels. These broad groups can then be targeted by the ads.
Other than stray examples like Google Ads above, only sites which have access to large amounts of first-part data (think Amazon) can hope to escape the impact of the triple whammy on their ad revenues.
Impact on digital marketers All companies who wish to run online campaigns will have to get smarter at collecting first party data. Can a website give something of value e.g a newsletter and collect user email IDs? For organizations having a physical footprint, can the sales teams routinely collect both customer and prospect email IDs and phone numbers at the point of sale? Digital marketers need to prepare their clients for this transition by pushing for such first-party data initiatives.
4. Generative AI Today, with ChatGPT and GPT-4 – among other products – front and centre in the news, this topic needs little or no introduction. Like many other industries, AI will disrupt digital marketing too.AI has also been in a fair bit of use by Google Ads and is expected to be in big use at Meta Ads (see above). The ChatGPTs and MidJourneys of the world now provide some nifty options to digital marketers. Copywriting, image creation, social media post creation and customer service/ FAQs are in for disruption.
One needs to understand that content creation as well as copy creation has been a resource intensive exercise, requiring skilled people. In digital marketing, having large quantities of quality content and ads is a big plus. And there are simply not enough skilled writers and visual designers available.
Generative AI helps overcome this barrier. A marketer skilled at creating the right prompts can generate content at scale, whether this be content ideas, blog posts, LinkedIn posts or others. In fact, writing effective prompts is akin to writing a good brief, something which has historically been part of every talented marketer’s skillset.
Proofreading, translation, data analysis, email marketing, market research, video scripts, targeting and SEO will also be changed forever.
Impact on digital marketers If a digital marketer has not already created an account at ChatGPT or GPT-4 or any of the generative AI products and used it for any of your marketing tasks, you should. The more you delay the greater the danger that it will impact future performance for the clients and brands you handle. 5. Newbie marketers The rapid growth in digital marketing has created a shortage of marketing talent. Most digital marketers lack marketing training and/or experience. Nor do most of the millions of organizations doing online advertising, SEO or social media, have in-house marketers worth the name.
Yet, marketing is one of the two pillars on which digital marketing rests, the other being the Internet medium. Without a strong marketing foundation, a lot of digital marketing work can be ineffective.
Here are some tasks marketers alone do well: writing effective ad briefs, brand-building, giving structured feedback on creative presented to them by their agency, getting the best out of their ad agency, taking customer feedback and conducting market research. These skills and more are lacking in the marketers today. How will they get the best out of digital marketing?
Impact on digital marketers Digital marketers need to up their understanding of marketing and experienced digital marketers can double up, playing a marketing or brand advisory role for their clients.
Sources 1. ‘How TikTok broke social media,’ The Economist, March 25th, 2023 2. ‘Meta’s year of efficiency brings lofty AI ambitions,’ Marketing Dive, March 16, 2023 3. How India Shops Online, 2022 report, Bain & Company